Cavan house prices to rise by seven per cent in a year - SCSI

Eighty six percent of estate agents expect national property prices to increase by an average of six per cent over the next 12 months while a similar number say the main reason for the increase is due to lack of supply. That's account to the Society of Chartered Surveyors of Ireland (SCSI).

These are among the key findings of a survey of over 200 estate agents from all over the country, which also revealed a marked regional variation with regard to future price movements.

While agents in Munster and Connacht/Ulster expect prices to increase by seven percent over the next year, the figure in Leinster is six per cent; while in Dublin, where prices are highest, the expectation is a four per cent rise.

In cash terms, a seven per cent increase on a €200,000 home outside of Dublin will equate to an increase of €14,000, while a four per cent increase on a €400,000 home in Dublin translates to an increase of €16,000.

Agents said the higher price forecast for properties outside Dublin reflected the covid effect and the increased attractiveness of regional properties due to the dramatic rise in people working from home.

Despite Covid, eight out of ten respondents reported an increase in enquiries and viewings over the last quarter.

The SCSI/Central Bank of Ireland Residential Property Price Survey is a quarterly sentiment survey of SCSI members, consisting mainly of estate agents, auctioneers and surveyors.

TJ Cronin, president of the SCSI, said lack of supply, construction lockdowns and steep increases in the price of materials meant prices would continue to rise.

We had a supply crisis pre-covid and that has simply deepened due to covid. While 45% of respondents in the survey reported a fall in selling instructions in Q2 2021, 81% reported an increase in enquiries. In addition, eight out of 10 agents are reporting low stock levels. And that’s why so many agents were seeing a consistent increase in enquiries even during the highest levels of covid.

“While prospective sellers were reluctant to put their property on the market, buyers, who in many cases were in a position to increase their savings, were left chasing a reducing number of properties. While it’s a sellers’ market right now, the rate of price increases we are seeing currently is not sustainable in the long term. Agents believe the only way to address the affordability challenge which purchasers are facing is to increase housing supply.”

Mr Cronin believes the cumulative impact of the slowdown on new home construction will continue to affect supply and prices until 2023 at least. "Significant increases in the price of steel, timber, plastic and insulation products – due to supply chain and transportation issues - and labour shortages across a number of trades will also lead to higher prices for new homes.

“Forty six percent of respondents reported an increase in Buy to Let properties coming on the market while 41% said it remained the same. The vast majority of agents said the main reason landlords were selling up was due to the low returns and complexities associated with rental properties. The SCSI has been concerned about this trend for some time as it has serious implications for the stock of rental properties and indeed the future of the rental market in this country.”

Housing supply

Turning to the wider housing supply situation the CEO of the SCSI, Shirley Coulter, said the covid crisis had deepened the housing crisis and extraordinary measures were now needed to address it.

“We believe 40,000 new homes – social, affordable and private builds - will need to be built over the next 10 years to meet pent-up demand and the needs of our growing population. Current output is around 20,000 units so a doubling of that will require a massive increase in funding and collaboration between the private and public sector.”

The SCSI is supporting the ESRI’s recent recommendation to Government to double its current investment in housing by borrowing between €4bn and €7bn a year, while availing of low interest rates.